The film opens with Gobber's house on fire and the Vikings and resident dragons getting it under control. Gobber is convinced that his old nemesis The Boneknapper Dragon, a giant, yet perfectly silent dragon (the only one with no roar) that clothes itself in bones for armor, is responsible. However no one else believes that the Boneknapper even exists, much less that it burned his house, especially when the evidence suggests that the fire was started by his underwear drying at his hearth and catching fire.

Undeterred, Gobber vows to hunt down the beast once and for all and Hiccup reluctantly decides that he cannot let his mentor go alone, so he convinces his Viking recruit comrades to join him as well. As the gang row to the island where Gobber believes the dragon lives, Gobber tells them of his past encounters with the monster, shown to the viewer in traditional animation. He apparently first met it when he discovered a group of frozen Vikings during a family outing and he extracted a small treasure chest from the ice. As the frozen Viking he stole it from resisted, the Boneknapper appeared and chased him until he landed back in the family boat. The contents of the chest turn out to be a small bone that Gobber has since used as a belt buckle.

The stories continue, becoming increasingly ridiculous as Gobber tells of later encounters being interfered with by hammerhead sharks, hammerhead whales, hammerhead yaks, and the Norse thunder god Thor in different combinations. Unfortunately, the group's attention is so occupied that they allow their boat to run aground and sink. Taking the loss of their only way home in stride, Gobber sets up a trap using Fishlegs, disguised as himself, as bait. Unfortunately, the Boneknapper silently comes up from behind the group and Fishlegs' attempts to warn them are ignored until it is in position to attack. The gang have to take shelter inside their own trap, and all seems lost until Hiccup sees an empty spot on the dragon's armor that exactly resembles Gobber's belt buckle bone. Hiccup realizes that the dragon may simply be seeking it to complete his armor.